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I am a Ph.D. student at Hebrew Union College-Jewish Institute of Religion. I study the History of Biblical Interpretation, which includes Jewish and Christian interpretations of the Hebrew Bible/Old Testament. My interests are religion, politics, TV, movies, and reading.

Friday, August 29, 2014

Book Write-Up: The Forgotten Man, by Amity Shlaes

Amity Shlaes. The Forgotten Man: A New History of the Great Depression. HarperCollins, 2007.

I enjoyed Amity Shlaes’ The Forgotten Man: A New History of the Great Depression. Whereas her biography of Calvin Coolidge was rather heavy, her prose in The Forgotten Man
was light, and she explained economics in a manner that even
non-economists like me could understand. Moreover, she made the people
in The Forgotten Man seem real. Her biography about Coolidge
had a lot of information, but I finished that book not really feeling
that I knew Coolidge that well. The Forgotten Man, however, was different because it had a stronger narrative and characterization.

Shlaes writes largely from a conservative perspective. She favors
lowering the tax rate on the rich and on corporations, since they are
the ones who invest and create jobs. She favors more of a supply-side
than a demand-side emphasis, favoring the producers rather than assuming
that the consumers having more money to spend will lead to economic
growth. She leans towards free-trade. On monetary policy, she strikes
me as rather flexible. She is not keen on the Federal Reserve
tightening the money supply too much, for deflation can lead to
problems, especially for people who borrowed money (they essentially owe
more than they borrowed). At the same time, she notes that President
Franklin Roosevelt’s undermining of the gold standard did not help
matters, for other countries thought that destabilized the currency.

Shlaes’ perspective is evident in her narration of the Great
Depression. According to her, the tax increases by Herbert Hoover and
Franklin Roosevelt hindered economic growth, while attempts by these two
Presidents to keep wages up so that consumers would have money to spend
did not significantly ameliorate the dire economic situation; neither
did their public infrastructure projects, for that matter. The New Deal
targeted businesses (big and small), and that discouraged investment,
since why would people invest if they did not know what the government
would do to them next? The Federal Reserve during the Hoover Presidency
was too tight in its monetary policy, according to Shlaes, and that
stifled investment. Shlaes also agrees with economists who argue that
the Smoot-Hawley tariff was part of the problem, for she contends that
this tariff increased production costs, discouraged European countries
from buying American products, and hindered Americans from buying
European products, which would have helped Europeans earn money so they
could pay off their debt to the U.S. While Shlaes is critical of many
of President Franklin Roosevelt’s policies, she does praise him for
helping to bring about lower tariffs. She also thinks that FDR’s
Security and Exchange Commission was a good idea, since that policed
Wall Street abuse. She says that many thought that FDR was letting the
fox watch over the hen house when he appointed Joseph Kennedy to head
the SEC, but that this actually turned out to be a good decision:
Kennedy knew the tricks of the trade, so he could do a good job policing
Wall Street!

Another problem with the New Deal, Shlaes argues, is that Roosevelt
could not make up his mind. Some elements of the New Deal contradicted
each other. Roosevelt got tired of people receiving relief, so he
created government jobs so that unemployed people could work. He wanted
the workers to receive a good wage, and yet he also wanted to balance
the budget because he thought that would improve the economy.
Meanwhile, he signed the Wagner Act, which promoted unionization and
allowed strikes. But that could be pretty problematic when WPA workers
decided to strike! There also appeared to be some waffling on whether
bigger was better: do we want big business, or do we want smaller
businesses (and anti-trust rules) that compete with each other?

Shlaes acknowledges that the economy steadily improved under the New
Deal. It just never returned to pre-1929 levels! The Depression lagged
on until World War II. At the beginning of each chapter, Shlaes gives
readers the unemployment rate for the year, and also the Dow Jones
Industrial Average.

I cannot say that I found myself disliking most of the characters of
the book. The leftists who were enamored (and, in some cases, later
disappointed) with the Soviet Union struck me as well-meaning
idealists. The same goes for the New Dealers, who tried to improve
people’s situations and came up with innovative ideas, such as living
units for migrants. Wendell Wilkie sought to protect private electric
companies from Tennessee Valley Authority competition, which was
understandable on his part, and yet I cannot say that the TVA came
across as that bad in Shlaes’ book (though she did seem to disagree with
it), since it provided cheap electricity to poor families. Other
characters include Andrew Mellon, who was under investigation for tax
evasion yet managed to find a common cause with FDR by helping to
establish a National Art Gallery, donating his fine collection of art.
The African-American evangelist Father Divine also is prominent in the
book: he was critical of New Deal relief programs, but he also helped
the poor, pressured Roosevelt to take an anti-lynching stance, and even
moved onto what used to be Franklin Roosevelt’s property. (Eleanor
Roosevelt said that she welcomed him as a neighbor!)

If there was one character I disliked, it was this one New Deal
lawyer who was going after the Schechters, Jewish chicken sellers who
were accused of violating National Recovery Administration rules. The
lawyer made a big deal about Mr. Schechter’s lack of education, which
struck me as cruel and elitist. For that matter, I also did not care
for the pro-Roosevelt journalists who exploited anti-Semitism in
defending the prosecution of the Schechters (who, it appears, were
probably supporters of Roosevelt, notwithstanding the NRA’s attack on
them).

The Forgotten Man is an interesting and thoughtful book.
Personally, what Shlaes says and what Robert Reich says (about the need
for a strong consumer base) both make sense to me, even though they have
different perspectives. Investment is necessary, but so are a lot of
consumers with money to spend!